Hulamin’s operating profit, sales drop
HULAMIN experienced disrupted output of rolled products and sales volume constraints, particularly in the first quarter, as a result of load shedding coupled with quality rework on two product lines.
The JSE-listed aluminium processor yesterday posted a decline in operating profit of 34 percent to R138 million, while sales fell 16 percent to 93 000 tons in the six months to June.
“Lower production volumes impacted by electricity supply curtailments, quality rework and the planned maintenance shutdown, constrained our sales of rolled products for the six months under review,” Hulamin chief executive Richard Jacob said.
Cheaper imports, largely from China, had added to pressure on both sales and volumes in the weak local economy, the company said yesterday.
“Asian markets are extremely competitive at present due to significant overcapacity in the region and we have reduced our activity there accordingly,” Jacob said.
“If we can protect our niche market, we will be okay.”
The depressed aluminium price, which led to widespread losses in the aluminium industry, added to Hulamin’s woes.
Although Hulamin does not produce aluminium and purchases its metal requirements from smelters, particularly South32’s Hillside operation in Richards Bay, the sharp fall in the aluminium price has created a pre-tax metal price lag loss of R55 million for the period.
Second half
Jacob said some of the corrective measures, including the installation of electricity generator sets, were expected to boost production and sales in the second half of the year.
Hulamin also expects manufacturing operations to benefit from the corrective measures, with challenging market conditions expected to continue in lo- cal and international markets.
Turnover dropped to R3.93 billion from R4.06bn in the previous comparable period last year. Meanwhile, the rand had weakened by 11 percent to an average of R11.92 to the US dollar, supporting rand revenues and counteracting the effects of domestic cost inflation.
The acquisition of the Bayside casthouse by Isizinda Aluminium, the combined Hulamin and Bingelela consortium, from South32 was finalised as planned in the half year to June, with operations having been successfully handed over on July 1.
“Not only does this strategic transaction secure Hulamin’s local supply of rolling slab, but, under Isizinda Aluminium, the Bayside casthouse is developing into a broad-range aluminium hub, providing the opportunity to re-introduce the local supply of products… which have been imported since 2009,” the company said.
The company’s new empowerment deal, which is subject to the fulfilment of the remaining conditions precedent, is expected to become effective during the third quarter.
Shares fell 4.48 percent on the JSE to close at R5.97.